PNE AG
XETRA:PNE3
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PNE AG
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Good afternoon. Before stepping into the presentation, I would like to comment our publication of today. As you could read, we raised the share buyback program about 2.1 million -- 100 -- 900,000 shares (sic) [ 2.19 million ] shares. It will start on Monday up to the 30th of November. The purchase price range will be between EUR 2.25 up to EUR 2.74 per share. The average is EUR 2.495 per share. So the total purchase price, we think, excluding incidental acquisition cost, will be up to EUR 6 million. The rationale behind is to meet the obligations arising from the 2014/2019 convertible bonds, which expires in 2019. Conversion price as of 10th October in 2019 is at EUR 2.9971 per share. This should lead to the avoidance of spending of about EUR 1 million related to the average share price of EUR 2.495 per share. We secured a lower share price additionally and opposite to the higher book value, which is -- which was at the end of the third quarter at EUR 2.9 per share. We additionally avoid the dilution due to the need of issuing newer shares next year, and at least we have a sufficient liquidity available at EUR 117.3 million. This all leads to this -- led to this decision. If you look to the highlights of the third quarter, we see that we have just right now projects of 90.3 -- 0.2 -- 93.2 megawatts under construction, which are in Germany, in Sweden and in France. We received during the year new permits of 41.3 megawatts. If you look to the on/offshore business, we've got milestone payments of approximately EUR 8 million for Borkum Riffgrund 2 and Gode Wind 3. Additionally, the project Gode Wind 4 was successful in the German offshore tender. One target is additionally to build up our new wind farm portfolio in 2020. In this respect, we have our projects -- our current project, Gerdau-Schwienau, with 21.6 megawatts under construction as well as our wind farm, Schlenzer, with 6.5 megawatts. We're working on a strategy scale-up, which I will talk about later. If you look on the next page, we're absolutely according to plan with our results. So the EBIT is at EUR 3.7 million, and the EBITDA is EUR 10.6 million. The EBIT compared to the last year is lower to some extent -- effect. The one -- first of all, we have the sales of the project to expect in this fourth quarter, so this is absolutely according to plan. It's usually in this branch, I don't know why, but always everything has to be done in the fourth quarter. The one single event is the EUR 21 million payment related to the refinancing of the 142-megawatt portfolio that happened last year, which has not -- has been not done this year. Additionally, the electricity generation decreased due to the dismantling of our old wind turbines and our repowering project Gerdau-Schwienau, and the lower wind year. So just right now, we are at 80% wind here, another 100% wind here.And last but not least, due to the investment in our portfolio 2020, we did a lot of investments. So we made our successful refinancing this year with re-payback of EUR 100 million bond -- corporate bond with 8% interest rate. Now we could successful get a EUR 50 million corporate bond. It was placed in the market with the interest rate of 4%. So you see, still we have a gross cash position at 115 -- EUR 117.3 million. A high equity ratio -- the equity of EUR 220.8 million (sic) [EUR 221.7 million] is corresponding to book value of 2 point -- EUR 2.90 per share. This is a little bit lower. The equity at last year related to dividends payment and our payment for the remaining 13% of WKN. So we still have a positive outlook for this financial year, so we stay with our guidance. If you look to the -- on the next page to the onshore business, a short market update. We got the decision that we -- from the government that a special tender will come up of about 4 gigawatts until 2021 in onshore wind and 1,115 megawatts additionally, which should be technology neutral. They are independently through the annual tender for wind onshore between -- where we have between 2.8 gigawatts in 2018 and 2,000 -- 2.9 gigawatts in the rest of the year until 2021. Related to onshore/offshore, there had been made no clearance. If you -- we have just right now 55.3 megawatts of owned wind farms currently in operation. As I said before, this is related to the dismantling of Gerdau-Schwienau -- of the old wind turbines in Gerdau-Schwienau. On the next page, you see in offshore business, we got [ ordinary ] milestone payments and -- related to foreign markets. I would like to announce that we would like to participate on the tender in Massachusetts on the 13th of December. So it's something where we would like to get a grip to the U.S. offshore market. It's our first touch with this kind of tender, and we will see what will happen as we -- we'll get experience on the tender procedure there. Related to the constitutional complaint filed, we see that it's slowly but steadily in progress. And from that perspective, the court is working and made a lot of -- wrote a lot of letters and questions to the government. And so therefore we think they take it serious and -- which increase our feelings that this could be -- lead to a successful end. If you look to the income statement, I have already spoke about the numbers. EBIT -- EBITDA and EBIT positive. We have got the milestone payments. We have the ongoing development business and we -- I think it's remarkable to know that we have earnings which we -- gains, which we haven't shown yet in about of EUR 20.9 million -- sorry, EUR 8.5 million this year related to the wind farms we have in our portfolio or we are having under construction for our portfolio. Look to the balance sheet. I think it's still important. The high liquidity position and on the other side you see on the current liabilities. And on the non-current debt that we have around EUR 106 million liabilities to banks, which are mainly non-recourse. This should be considered. The outlook. We continue to build our wind farm portfolio. We see in our key market presence in U.S. that we're working very hard on the projects and we went through successfully through some steps. In Poland, we could go into the next phase with the [ Asna ] project. So in total, if you look to the pipeline in Page 3, we have said we could increase our Phase 3 volume to 1,605 megawatts related to the half-year amount of 914 megawatts. So still, we confirm, as I said before, our positive outlook for this year. Important is that we're just right now working very hard on our scale-up milestones. And if you would see on Page 10, we raised new -- the first new projects and services, which are available now. I think in the next upcoming weeks, we will show what we mean with that with new products and new services we would like to show to the market. We have made first revenues with new products in our project Wangerland. We made financing for our project. In other projects, we do the construction management or we look that we could do additional services. Just right now, we're working on some [indiscernible] processes for companies which could help us to increase our services. We will see what comes out. We improved our financing structure, and we scaled up resources for our smart development team. Just right now, we finalized the definition of our processes and structures. We have to consider that we -- with the 100% takeover of the shares of this 100% ownership of WKN shares, we're just right now in a situation to optimize our organization. And that's what we're just right now doing so that we have a direct way of working altogether. We changed the WKN AG to WKN GmbH. So we have a clear plan to lower cost and be more productive and efficient in our group. From this respect, we are -- in this respect, we have a -- we are busy on all ways internally, externally, and we seem to be on a good mood, and we are in a good mood that we get our targets done. Thank you very much.
[Operator Instructions] The first question is from Karsten Von Blumenthal, First Berlin.
This is Karsten from First Berlin. You rightly mentioned that the German government finally, one has to say, has shown how they want to distribute the extra tenders. It is now over 3 years, and I think this could give the German market a good push from next year on. However, and you rightly say this in your report, currently, approval procedures are very slow and it takes quite long to get approvals. Do you think this will change in the near future now that the government obviously has shown again more interest in onshore wind?
Yes. We raised this point to the government, and just right now, they are working heavily in the Ministry of Economics to come up with a plan how to avoid this kind of structural problems related to the procedures -- to the committing procedures. And -- so that's a really clear point. From our side, we could bring up a lot of point in this respect to the lower -- Minister of Lower Saxony and as well to the government. And as I said, we're working hard on this, and we expect that they will come up with an improvement.
Okay, that sounds promising. You were all-in-all quite successful on -- in the German tenders this year. However, in the last 2 tenders, you were not -- PNE was not awarded a project, and the project from the first tenders will be built this year. That basically means that currently you don't seem to have any awarded project in Germany that you can start building in 2019. That means you really need to win in the next 2 tender rounds in February and May to get projects through. And I would like to listen to you how you see that situation.
Yes. So yes, there is -- and as I said before, we're waiting for permissions. We are -- as you can see in our pipeline overview, we increased our numbers in Germany, Phase 3 and Phase 4, from 153, if you add them, to close to 200. So we are having a very stable pipeline, but nevertheless, as I said, we have a delay in the permission processes for some reasons which is not in our responsibility. But nevertheless, we are very clear that we see the projects occurring because we are doing greenfield, and greenfield means that we have a high-quality product. And that gives us a very high chance to win tenders. And on the other side, therefore, at the time when we stepped into the market -- in the foreign markets several years ago, we invested in this. And now, we see in France, for example, in Poland and other countries, how the projects are coming up. So this will be the balance.
All right. Just one follow-up, could you -- do you have an idea or a plan how many megawatt in permissions you hope to receive before the first tender in February is done? I mean the -- you have to put in your project by mid of January. So in megawatt roughly, could you give us a range how many megawatt you might have at that point and time in Germany?
I can only say, if you look to the number, we had -- in the first quarter, we had in total 112 megawatts in our pipeline for Phases 3 and 4. Now we have close to 200. So you see that it's -- that we are still working to the pipeline. And I can only say that we are -- with some projects spent a longer time in the permission procedure, and we expected some of them are coming up in the next couple of months, but I can't say exactly now.
Okay. You rightly mentioned that, as always, in the wind business usually money comes in, in Q4, and this is again this year. And when I see into your project, I see 3 main projects that could be sold in Q4, that is Kittlitz with 20.7 megawatts, a French project with 19.2 megawatt and U.S. project rights with roughly 200 megawatt. Do you intend to sell all these 3 projects this year, ideally? Or what are your plans?
Yes, we have [ only to add those ]. We have 3 projects, which is Kittlitz, Gross Niendorf and [ Le Pierre ]. We have one French project. This project, we expect high EBIT amount. And additionally, we're working very heavily on the Chilocco project. This is in delay due to some decisions from the Trump administration. First of all, we have been in a sales process and then the tax went down to 21%, coming from above 30%. So everybody looked which projects they would like to take and which not. And this decision process took several months. And then the change of politics, and that's in respect of the support of coal power plants is behind the changed prices in -- for the power and decreased the prices for the power, which led to a redesign of our project so that we could get again our IRR. So this is the development we had to face and where we ranked. So we hope to get it sold, Chilocco, this quarter. This is the target.
Okay, very good. You mentioned the Massachusetts offshore tender, you will participate. Could you give us a bit more insight into that tender? What would it mean when you were awarded and what are the next steps in this process to get a glimpse of the U.S. market offshore?
Yes, we see the offshore U.S. business as a long-time investment. So this is the first tender we attend, and we are 1 of 19 companies in this tender. And the U.S. Bureau of Ocean Energy Management is offering this auction. And for us, it's something where we would like to go through a learning curve, and nevertheless, as always, we try to get it done. But -- or having in mind that we would definitely need partners on this due to the fact that the investments are huge.
The next question is from Holger Steffen, SMC Research.
[ Altogether], Holger Steffen speaking. I have only a few additional question to Karsten. I have one question concerning for the milestone payments. Maybe you could give us an update, when do you expect now first payments from Gode Wind 4 and from the sold British pipeline? I've seen nothing to this point in your report.
Yes. First of all, to the U.K. milestone payment, at that time, we made a very good business with the payments we got at that moment, but nevertheless we are waiting the next steps to be done by Brookfield. We are in the back seat. We make our suggestions, but nevertheless, we are depending on their decisions and on their development progress. So just right now, we don't plan to get something in this year and next year of milestone payments out of the U.K. deal. And the milestone payment in Gode Wind is something -- Gode Wind 4 is something which depends on the decision of Ørsted. So formally done in this respect, but they have to take the decision to make the financing. So that's a trigger point for the next payment. And this can be done -- it could be done in -- I don't know when they would like to do it, but I think it will be in the beginning of the 2020s, 2021 or something like that.
Okay. So only one question to your profit and loss statement. I've seen the increase of the other operating expenses was relatively high in Q3 with 25.7%. Maybe you can give us a short explanation. And is the comparable amount realistic for the fourth quarter, too?
Let me see. I have to -- need a short look to my internal presentation related to the financial numbers so that I don't say something wrong. You talk about -- which number, please? Can you repeat it, please?
It was -- the other operating expenses was EUR 6 million, an increase of roughly 25% to the last year.
Other expenses. Let's have a short look. I don't have this part in my mind at the moment. Other expenses. I can't answer you this question just right now. I need to have a deeper look on this number, yes. I would suggest that I send you this -- an answer on this separately.
Okay, no problem.
I have it not on my desk.
Great, no problem. You've mentioned, as far as I have understand, 3 projects for sale in the last quarter. It was Kittlitz, Gross Niendorf and [ Le Pierre ]. Is this correct?
Yes, [ Le Pierre ] is one project, which we -- it's a French project, yes.
Is [ Le Pierre ] the name of the 19 megawatts project?
Yes, it's our French project, exactly, which we consider the French project [indiscernible]. We have around, let's see, 19.2 megawatts exactly.
Okay. And I didn't see so long Gross Niendorf, which amount of megawatts has this project?
Gross Niendorf is 7.6 megawatts. This is the project where we got permission 4 weeks ago -- 3 weeks ago, 4 weeks ago, but we are still -- we are -- started the construction immediately, and we think we get it finalized this year.
Okay, then this 7.6 megawatts come additional to the 93.2 megawatts you have mentioned at the moment in construction?
Exactly. So it's -- again, it's a project -- Kittlitz with 21 megawatts, Gross Niendorf with 7.6 megawatts, [ Le Pierre ] -- for the projects is 90.2 megawatts. So that's the 3 projects we have in -- we are working on. Whereby -- not everybody will be -- not all of them will be ready until the end of the year, but we will sell it -- sell them until end of the year.
At the moment, there are no further questions. [Operator Instructions]As there are no further questions, I would like to hand back to you, Mr. Lesser.
So thank you for your participation and your interest in to PNE, and hope to hear you soon with good news on projects we have done and sales we have done. Thank you.